Government opens door to compensation for disgruntled CMC clients

The Government has finally begun the process of transferring claims management company (CMC) complaint handling to the Legal Ombudsman, opening up the possibility of CMCs having to pay compensation to dissatisfied consumers.

The transfer, included in the third reading of the Financial Services (Banking Reform) Bill in the House of Lords on 9 December, is expected to receive Royal Assent early next year. The Ministry of Justice (MoJ) and Legal Ombudsman have begun working towards the change, planned for later in 2014, which will also give the Claims Management Regulation (CMR) unit the power to fine CMCs which use data sourced through unsolicited calls and texts, or who provide a poor quality service.

Justice Minister Shailesh Vara said that any CMCs engaging in poor practice should be in no doubt that the Government was bringing in "tough new powers across the board".

“This latest change will make sure people who get a bad service can get redress,” he said.

Legal Ombudsman Adam Sampson described the change as great news for consumers and CMCs.

"It will boost confidence in the services provided by the sector," he said. "The Legal Ombudsman will be ready to start accepting complaints as soon as legislation allows.”

Added to the changes, CMCs will also be required to make sure the claims they are submitting have a realistic chance of success, as well as ensuring full evidence is provided to back up any allegations.